[Click eStock] "Hyundai Steel's U.S. Entry Expected to Boost Corporate Value"

"ROE Expected to Increase with U.S. HPLS Steel Plant"

On September 21, Hyundai Motor Securities raised its target price for Hyundai Steel from 36,500 won to 46,700 won and maintained its "buy" investment rating.

Park Hyunwook, a researcher at Hyundai Motor Securities, stated, "Hyundai Steel's ROE (Return on Equity) is expected to rise by 2 percentage points once the U.S. Louisiana steel plant (HPLS) is completed and begins normal operations. Therefore, the stock price is expected to trend upward ahead of the scheduled completion in the first half of 2029, reflecting business performance improvements." He added, "The current price-to-book ratio (PBR) is also low at around 0.2 times, which is another investment point."

For the third quarter, Park estimated Hyundai Steel’s operating profit at 10.01 billion won, up 73% from the previous quarter and 7% year-on-year. He explained, "While improved product prices for key end-user industries will boost earnings, the results will come in below initial market expectations due to the stronger won, higher coking coal prices, and continued weak profitability in long and shaped steel products."

He expressed a cautious outlook on the steel industry. Although China is maintaining production cuts, its exports have increased. Park noted, "China's sluggish demand from the real estate sector and the wider price gap between domestic and offshore prices are incentivizing more exports. Unless the trend of rising Chinese steel exports reverses, it will be difficult for the industry to significantly improve, even if import barriers are raised by countries including Korea."

Instead, he highlighted the importance of the HPLS project, which broke ground this month and is slated for completion in 2029. Park said, "In the United States, steel import tariffs will rise to 50% in 2025, and growing demand from data centers is making prices the highest globally." He estimated that HPLS will generate 5.5 trillion won in revenue, 1.2 trillion won in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), and 610 billion won in net profit, with Hyundai Steel's 50% stake translating into approximately 300 billion won a year in equity-method earnings.

This content was produced with the assistance of AI translation services.